Thanks in large part to efforts of the National Academy of Elder Law Attorneys, President Obama has recently signed a new law which enables individuals with disabilities (under age 65) to form their own special needs trusts. Previously, only parents, grandparents or a legal guardian could set up such a trust. This law applies only to “self-settled” trusts, in which the individual with disabilities puts their own money in the trust. This law will have significant practical implications for individuals with disabilities or special needs, who inherit money or are awarded money in a law suit (i.e. personal injury), making it much easier for these individuals to have control over their own financial affairs.
Here is a more detailed explanation of the new law from Illinois Naela:
“On December 13, 2016, the President signed into law the 21st Century Cures Act. Section 5007 of this Act allows individuals to establish their own special needs trusts and qualify for the exception to resource counting under Section 1917(d)(4)(A) of the Social Security Act. The Illinois Chapter of NAELA joins NAELA in praising the passage of this law, which corrects an oversight in the 1993 trust law affecting individuals who did not have a parent, grandparent, or legal guardian had to petition a local court for the creation of their trust. This in turn led to unnecessary legal fees, time wasted, and administrative confusion. The Special Needs Trust Fairness Act corrects this error by allowing individuals with capacity to set up their own trust.”